Laws vary from state to state but state statutes often provide for the creation of an implied warranty of merchantability by a lessor of goods in a lease transaction—such as for office equipment, computers, telephone systems, heavy machinery, home furniture, motor vehicles, or electronics.

For goods to be merchantable and comply with the implied warranty of merchantability they generally must:

• pass without objection in the trade under the description in the lease agreement;

• in the case of fungible goods, are of fair average quality within the description;

• be fit for the ordinary purposes for which goods of that type are used;

• run, within the variation permitted by the lease agreement, of even kind, quality, and quantity within each unit and among all units involved;

• be adequately contained, packaged, and labeled as the lease agreement may require; and

• conform to any promises or affirmations of fact made on the container or label.

Other implied warranties may be provided by statute or arise from the lessor and lessee’s course of dealing or usage of trade (standard practices and methods in the industry).

In New York, the Uniform Commercial Code (UCC) governs the lease of goods and includes provisions for implied warranties, including the warranty of merchantability. Under the UCC, when a lessor leases goods like office equipment or vehicles, there is an implied warranty that the goods are merchantable. This means the goods must be fit for the ordinary purposes for which such goods are used, must conform to the description in the lease agreement, and must be of even quality and quantity within each unit and among all units involved. They must also be adequately contained, packaged, and labeled as per the lease agreement, and conform to any affirmations made on the container or label. New York may also recognize other implied warranties arising from the course of dealing or usage of trade. It's important for lessors and lessees to understand these warranties, as they can affect the rights and obligations under a lease agreement. An attorney can provide specific advice on how these general principles apply to individual circumstances.